I officially have 100% proof that we have officially hit rock bottom.
No other indicators from NAR or the government have been as accurate as the proof that I have. I found a 100% correlation!
When My MOM SELLS, THE MARKET SKYROCKETS shortly thereafter!
The chart to the left is factual. Actual points when my Mom has sold her property.
The last arrow is from a recent listing which is now under contract. (see listing, check out the photos and collages).
So there you have it. No more need to think. I have always been against the NAR campaign that says "Buy Now," but now I can show proof that NOW is the time to buy! That market is going UP UP UP!
Thanks Mom, for taking one for the team and helping us all out by single handedly turning markets around!
For my previous prediction on the EXACT best day to buy, read my Market Timing post.
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I am officially launching FranklyMLS.com, the The First Wiki MLS!
Where BUYER AGENTS, in Virginia and DC, from multiple brokerages come together to ADD information and photo albums to listings they visit. MORE DATA & 1,000+ MORE PHOTOS!
1) One-Way Information. "Here are homes for sale, as marketed by the listing agent. Take it, trust it, or leave it."
2)Photoless MLS Listings!
Sure they sell for $15,000 less but they are a pain for everyone. Oftentimes foreclosures or a listing by an underpaid or sucky agent have no photos!
3) Confusing Branding.
Who is selling what? Each of the 60,000 MLS listings are plastered with one "Brought to you by" buyer agent from one brokerage. I tried to explain: "No, I am not listing 1,298 homes," but it isn't the consumer's fault, it is confusing! See my account on Homesdatabase.com/frankly a service that many agents pay $30 a month for. My annoying face on each listing.
4) Limited Data or Sign-In Required.
All but a few sites have stopped the practice of requiring users to create an account and login in order to see listings. Also many sites will NOT show you all the data possible. Some even hide the addresses so you have to "call your local trusted Realtor!"
5) Fancy, & Feature Filled, But SLOW-
Some of it might be useful, but it slows down the website. Their goal is to have such perfectly targeted results that it can take minutes to find something.
6) Small photos. As our monitor resolutions get higher, the images get smaller. On my screen most MLS sites show 4 inch photos.
7) Computer based. No focus on cell-phone ready searching.
(Attn Buyer Agents, do you have a progressive office? Let me come and talk at your Tuesday meeting so that more Buyer Agents can get involved.)
The World's First Wiki MLS.No, we can not CHANGE the listing itself (or the price!) as presented by the listing agent. What we do is ADD comments and photos to the listing and as a community flag and remove inappropriate comments. Every buyer agent with an ounce of techie-ness should be taking Buyer Agent PhotoAlbums. What is that? Well, the listing agent takes photos for their sellers to put the house in one light, but the buyer agent takes photos for their clients in a more realistic light. Including shots of how far it might be from a highway, or showing bathroom water damage or aroach infested place (scroll to bottom of those listing to see the comments).
The goal is toadd information, and not opinions. No "this house stinks" or "this house is great," but instead factual information like "This house backs to Rt 66" or "This house is listed at 44.6% lower than the purchase price in 2006." Information not evident in the listing agent's presentation. I wish everyone was like Loudoun agents Tony and Danilo with their Blogback blogging for feedback where they list the pros and cons of their listings and ask buyer agents to leave comments. How can you find the reviewed homes? When you do a search on FranklyMLS.com, homes with a YELLOW highlighter, those have the comments, see an example search for 1021 Clarendon.
2) 1,000 More Photos Than ALL other MLS sites.
So far, prelaunch, 10 buyer agents from 5 firms add photo albums with as many as 40 photos of 50 properties. With this, the database grows to thousands of extra photos. Consumers want PHOTOS,PHOTOS, PHOTOS and on our co-opetition website, several otherwise competing agents come together to give what the customer wants... MORE INFO and PHOTOS.
Sidenote: A year ago I bought a baseball glove from Amazon.com. It was photoless. After getting the glove, they asked if I would take a photo of it and post it on Amazon. That is what first gave me the idea for this Wiki MLS. (see post)
The site also has a point system. 1 point for comments, and 10 points for a photo album. For that, the contributor is listed underneath the listing instead of my mugshot on each listing (see above). They also get a front page link to their website. Why contact me as a buyer agent, if another agent has actually BEEN to the property, specializes in that area and has helped you get more information on it.
3) No branding, advertising, or logins required. Other than the required link from the site owner (me) at the bottom of each page, there is no advertising or cheesy recommended buyer agent next to each listing. Only when a buyer agent contributes to a listing with comments or a photo album, do they get a link to their site. Also, you should already have a buyer's agent by the time you hit this site.
4) ALL MLS DATA(that is legally allowed to be shown) We show everything. Including BOTH the Days on the Market-M (MLS#) and Days on the Market- P (Property). Otherwise known as DOMM and DOMP We even show you the "within the industry 'you must be nuts'" listing agent's name and number. Only 1 other site does that. Don't worry agents, there is a disclaimer that says NOT to call the listing agent and why. So why have it? Well the consumer should ultimately decide.
What we can NOT legally show is: Realtor Remarks, Compensation amount (ask your agent if they take buyer agent bribes), Owner's phone number, showing instructions and lockbox codes.
5) Not Fancy, just FAST.Except for photos of houses, there is not one graphic, icon, logo on the site. No Geewhiz, just speed. With that comes fewer features, but how many features do you see on Google or Craigslist? Just give me info fast, even if it isn't 100% accurate (as in there might be a "madison manor" in both Arlington and Baltimore). FranklyMLS.com searches by keyword only. I know that looking at 400 homes can take a ton of time. The goal was to count each click and scroll in the home buying process and cut that time down by 80%.
"Sexy?" homes?Search the Realtor Public Remarks. Try it, search for "sexy." Only a 3 of the 33 local MLS sites will let you search the Realtor Public Remarks as part of an advanced search. Some information in these remarks can't be found in any drop down or checkbox search. For example: Lake Ridge Short Sales or Arlington Metro
Keyword search for ANYTHING.One box, search anything. Including, search by ZipCodes, subdivision name, school name (if the agent put it in), street name, street number, city, brokerage name, and even by agent name (nobody does that). It takes getting used to, but it works for Google and Craigslist, dso it works for FranklyMLS.com
Spreadsheet mode. Search like the Realtor's back end system. Text only results to quickly find what you need. Also the columns show you in a quick second the List price, Original Starting price, Tax assessment and DOMp/m. (See link above)
Photos only mode. Just a page full of 50 medium sized images. For the quick glance.
Photos and Details mode with image rollover. Most sites that have this mode have useless 1 inch images. We show in this mode the 4 inch images that other sites use for their "full size." Also you can use a rollover link to see all the other 2-30 images.
6) HUGE PHOTOS.Example. All the other sites use the 4 inch photos for each listing. Probably to leave room for mortgage calculators, frames, ads etc. We instead are the only ones that pull the high res 7 inch photos as the DEFAULT. Bigger is better.
7) Cell Phone Ready.Nobody offers this... for FREE.
With the former slogan, "So easy, a cellphone could use it," the site wasn't designed for the cellphone, but it is so simple that it still works great on most cell phones. I recommend the "photo mode." This is perfect for when you are in front of a house and want to get the details. I suggest using the house # and the zipcode.
******
Other interesting features:
FACEBOOK integration.We all have been asking ourselves if a useful tool for Facebook will come up. Well now there is one. You can "save" each listing into your Facebook account with 1 click. Then your friends can comment on what you have selected, or you can share them easily with loved ones.
Super Short URLS.http://franklymls.com/FA6683625 for easy copy and pasting. (Update: we just dropped the .html) into an email for others to share. I'm obsessed with "easy."
Find Similar Results: If you see a "more" or a ">>" click it to find similar homes or to see ALL the listings that a particular agent has (great for comparing listing agents!).
Links to similar Craigslist FSBOs, and to Zillow for previous sale data.
Link to that property on Google maps. Click on the "map" link.
So that pretty much wraps it up. I hope you have enjoy the site. I would love to get some feedback from current users (see Feedback $$ contest), local agents and others on how to improve the site.
- Written by Frank Borges LLosa-Broker/Owner FranklyRealty.com
Reviews of FranklyMLS.com, the new Wiki MLS (send me your review)
So you are buying a Virginia bank owned property, and REO or a Short Sale? You need to understand the various bank addendums that accompany them, or you might miss a $3,000 hidden fee.
But first, a quick background. Agents that are members of NVAR, and are REALTORS, use a 15 page contract that was painstakingly created by lawyers and a contracts committee. They try to design it as evenly as possible with several "fill in the blanks." Local Realtors receive hours of training on these standard contracts. While a client might want to also have the contract reviewed by a lawyer, there is some comfort knowing that it everyone uses the same contract and was written by lawyers with a neutral bias.
But when you buy a bank owned property, you start with a standard contract, but then the bank sends their oftentimes non-negotiable "bank addendum." I can't blame them. Sometimes the decision maker is in another state and dealing with hundreds of offers. Any small change in contract terms might require bringing in lawyers etc. They would rather take a lower price, but leave their terms untouched.
The addendums are heavily 1-sided FOR the banks and since every bank has a separate bank addendum, there is currently no training for REALTORS, (I proposed an NVAR class to fix this)so that they can better understand them.
Here are just a FEW of the things you should know about bank addendum contracts:
Addendum means "Everything in the main contract is nullified" if the addendum covers anything already in the main contract. So if your main contract says you get a walk through, but the addendum says "As-is," the addendum wins.
Some bank addendums are written nationwide and ignore local laws. Local laws DO supersede these contracts, so therefore sometimes there are terms in them that are not enforceable.
Watch out for hidden new fees. One of the agents that I work with had their main contract agreed to, but the addendum needed to be signed. The addendum sneakily (is that a word?) shifted a $3,000 tax to the buyer. Hello! That is real money, don't just sign it.
Most addendums are more "AS-IS" than the regular contract. The bank would rather take less and be done with nickel and diming. This is fine, as long as you realize and are ok with this risk
Most addendums allow the bank to cancel the contract all the way up to the close date. Yep, they can walk, sometimes for a $1,000 fee or sometimes with no penalty. If they get a higher offer, or whatever, they can break the contract. Again, this might never happen, but you need to know what COULD happen.
Bonuses to use their title company. In Virginia the buyer is legally allowed to pick the closing company. But oftentimes the bank wants their company to do the closing (in part because they share in the revenue) so they offer a $1,000 incentive. On something like a bank sale, with the former owner losing their home, I would want MY title company to tell me everything is all clear.
Termite provisions are stuck. Normally the seller pays if there is termite damage. The addendum shifts the risk back to the buyer. I'm not talking about the $35 inspection, I'm talking about repairs.
Does anybody else know of details that are hidden into these addendums? Again, there are dozens of variations, so make sure you review it carefully and have a lawyer review it.
Make sure you work with an agent that has done some of these deals and can guide you through the higher risks, but which oftentimes comes with lower priced bank homes.
Written by Frank Borges LL0SA- Broker FranklyRealty.com
Don't miss the comments and discussion by other agents with other bank experiences. And please report typos! Keywords: Arlington, Fairfax, Alexandria, Manassas.
So you've just looked at 10 homes and your brain is fried.
Everything starting to look alike? Oh No!
Thesolution: Buyer Agent Photo Albums.
Your buyer agent should be taking 30-50 photos per house that you visit. Seems like a nobrainer to me, and I've been doing it for years, but now I thought I'd share this simple, yet extremely effective idea. If your Realtor doesn't do this, feel free to send them to this post and say, "Gimme dat!" or better yet, get a tech savvy agent.
A buyer's agent photo album should capture a truer picture of each house, with the BUYER in mind. Including:
Each room, even if it just seems like 4 walls, "nothing" is "something"
Each closet
Hallways and staircases
Washer and dryers
Problems like ceiling watermarks and anything questionable
Unfinished basements or horrible 3rd bathroom
Details like linoleum floors
The neighborhood view
The backyard view
And the shots should show where the rooms start and end. For example, take a real shot of that bedroom that you thought was big in the MLS photo, but was really just a great photographer that ended the shot right before the wall turned (I admit, I do that).
So your buyer's agent should be offering this service. If they aren't, or can't, I guess the client could do it, but they should be absorbing the house on a macro level. Meanwhile the agent snaps 4 or 5 quick shots per room (no time for Ansel Adams). I strongly suggest the Kodak v570 (photo example shows what the v570 captures vs a regular camera.)
The camera should be set to the LOWEST resolution for faster uploading and web viewing. Just start firing away like a mad man. Put it on motor drive if you can, and consider turning OFF the flash for faster recycle time between photos. If you know how to change your ISO, set it to 1600.
The point of these photos isn't to be pretty, but to be fast. Many look like this:
Steps for a buyer agent photo album:
Start with an exterior photo and a photo of the house number. That way the viewer knows where each house begins.
Shoot a closeup of the listing sheet, so you have the address and price.
Take 30-50+ photos per house
At the end of the day, upload them using Picasa's free software from Google (or Ofoto) and with one click, you can upload it to a private photo album just for your client (don't send tons of attached emails, that is so 2001).
Then you send them a link to the album.
The other huge advantage... SAVE HOURS!
Frequently buyers want to "see it again," because they don't fully remember how big something was, or the condition of the house. That is fine, but the photo album cuts that need by 80%. Saving the client's time (and the Realtor's time).
Written by Frank Borges LL0SA- Virginia Broker/ OwnerFranklyRealty.com
I was reading The Washington Post on Sat November 24 and I came across their "Real Estate Trends" report for Fairfax County. They compared the first 6 months of 2006 to the first 6 months of 2007, excluded condos, and they used data gathered through the courthouse (ie. not the MLS).
Out of the 47 zip codes, they said the #1 fastest growing zip code was 20170, Herndon at +14.4%.
How can this be? I recently wrote about Herndon and the Foreclosure mess going on over there with as many as 48% of homes on the MLS from $300k to $400k being in some stage of foreclosure (See my SOL foreclosure post).
So I set out to prove the data wrong (I'll admit to my bias). I suspicious of the Post disclaimer saying "It excludes some types of marketplace transactions, particularly those that are not at market price."
Aha! Gotcha! My translation: Take out the foreclosure and short sale problem in Herndon and home prices went up!
Oh this is gonna be good!
I pulled data from the MLS for the same time period. Like the Post, I used the Median price.
Washington Post's Herndon data: Jan-June 2006 356 Homes $411,000 Jan-June 2007 123 Homes $470,000 $59,000 increase or +14.4%
Frankly Herndon Data (from MRIS) Jan-June 2006291 Homes $475,000Jan-June 2007199 Homes $485,000 $10,000 increase or +2.1%
I didn't see 14.4%, but it still went up!?
So then I ran the numbers from July 1 2007 to present.
Frankly Herndon Current Data(from MRIS) July-Nov 25 2007 134 Homes $421,000 (vs $485k in 1st part of year) $66,000 DECREASE or 13.1% (this was based on 6 months later, so one could argue that annualized that is 26.2%)
Up 14%? Down 13%? Down 26.2%? Flip Flop!
Bottom line is, I don't believe DATA. Anybody's DATA
How can you compare 300 homes in a zip code to a completely different 150 homes a year later? These are NOT the same homes. Add in a new community of 30 homes (which are always much higher than resale homes) and it can make a zipcode look like it was skyrocketing. I even thinknew homes actually might be the reason why NAR hasnever shown a decrease in home sale prices (with the exception of this past year).
And even if you DID believe the data, what then? It is still useless! So, if Herndon is one of the few zip codes that are UP (as well as 22046, 22041,22309), what?,you should buy there? Or are they implying that you should buy in the zip code that they say is down 10-19% (22102, 22124, 22031, 22030, 20124)? Since they are a better "deal?"
You also have data extremists, such as bubble prognosticators. To the right is a famous chart from the S&P Case-Shiller index. They are claiming that prices will drop 50%. Is your $500,000 condo going to be worth $250,000 in a couple of years?
Oh, by the way, Robert Shiller is getting rich on this doomsday prognosis.
And the Realtor Assoc comeback to this is weak:
Lawrence Yun, NAR's chief economist says,"In some ways we’re tracking different things. We use MLS data, so our figures are as timely as possible and are more representative of markets. Shiller uses county records and mortgage data from the secondary market. These sources lag further than ours and they capture a disproportionate percentage of higher-priced homes."
Let me break that down really quick. NAR's main excuse is that the data is delayed and is more weighted toward higher priced homes? Um, that was a horrible comeback.
Ok, it is 3,6, 9 months behind, so just wait, or move the data over.
Are you saying you agree with them in regards to higher priced home? So with the average home in the US being somewhere around $250,000, anything "high priced" like $400k will drop like they say?
NAR better come up with a better comeback to that, no wonder people believe it.
Bottom line is, data is too easy to manipulate.
Ok, so what should buyers do (if they, not their Realtor, decide to buy)?
And the only data to look at is data pulled by your agent showing you extremely local data (as in down to the neighborhood) while making adjustments PER house. Does it have a garage? Compensate for that. Larger Sq Footage? Etc. Then and only then can you see any real trends.
- Written by Frank Borges LL0SA- Broker FranklyRealty.com (please report typos!)
Like what you read? Thanks. Make sure you subscribe (upper corner of Blog.FranklyRealty.com) so you can get my next post on Days on the Market correlation to prices in Northern Virginia. Also forward this post to others or share this post using your Facebook account.
Update: Look at the Nova Housing Bubble and their example of Herndon homes selling for 41% off their previous purchase price.
Punchline: Buy homes with No Additional photos= Save $15,000 on a $400,000 house.
Buyers LOVE seeing tons of photos for each listing online. I think Realtor.com said that listings with multiple photos get seen 6 times more than listings with 1 photo. The tendency for buyers is to see a photoless house and think it is garbage and skip to the next listing, when in fact it might just be a sucky listing agent or a foreclosure with an underpaid agent. (see the Arlington foreclosure Megan bought, it had no extra photos and she almost skipped it)
I've vented previously about Sucky Listing Agents that use free "drive-by" high school photographers to post one default photos on the MLS. Well sucky listing agents are GOOD for buyers!
Therefore, DO NOT skip photoless listings. I know it is a pain (also a pain for the buyer agent, which should be making a photo album for each viewing), but take the extra effort and potentially save $15,000.
I painstakingly reviewed 268 Sold listings in Fairfax since 5/1/07 from $400k to $500k.
24% had NO ADDITIONAL PHOTOS!
This is embarrassing! Also note that 57% of FORECLOSURES, Bank Owned, REOs etc had no extra photos.
Only 12% of agents posted the maximum 20 photos. This amazes me (FranklyRealty.com Requires All 20). Note that the local MLS just went to 30 photos, and now they are free. So if the $12 was too much for your agent, now they have no excuse.
I also found listings with more photos sold faster (duh). Here are the photos to Days on Market (DOM, not the champagne) analysis:
1 Photo = 70 DOM Avg
6 Photos =40 DOM
16-19 = 36 DOM
20 MAX= 32 DOM
The Closed NET Price as a % of the Original Price also showed a direct correlation.
I scrubbed the data to find the REAL Original price. I manually adjusted the 20% of listings that were relisted (see my best of 2006 blog on MLS DOM data fudging), and I adjusted for seller subsidy.
Listings with fewer photos sold for less.
1 Photo= 91.2% of Original Price
6 Or more= 95% of Original Price
Therefore on a $400,000 home, Photoless listing sells for 3.8% LESS. (Now one can argue that a sucky listing agent also might suck at proper pricing, but come on, you get the point)
Bottom line for Buyer: Just like I've said staging gets you MORE $ for your listing, the opposite is true for buyers. Buy unstaged homes (see Don't Buy Staged Homes) when you can and consider the poorly marketed homes to get a better deal.
Bottom line for Sellers: Duh, at the very least, make sure your agent puts a ton of photos.
Bottom line for Agents: Keep up the bad work, it makes me look better.
Share this blog post with a friend. Make sure to sign up for this blog (upper right of the page Blog.FranklyRealty.com) as next week I'll show more of the data and how Days on the Market correlates to price. Also more on DOM-M vs DOM-P Relisting tricks.
This post is a link to a 6 minute video showing the process involved in buying a Bank Owned Property in Arlington Virginia, by a Realtor. Megan Buckley, a Realtor with FranklyRealty.com, recently bought her REO home in South Arlington. It was bank owned.
Foreclosures aren't as frequent as people think in Arlington, and I still suggest looking at everything, but it is possible to get one for a deeply reduced price versus the previous owner's purchase price.
Highlights from the video:
Don't ignore homes with 1 or no photo. Poorly marketed homes get seen less, and therefore sell for less.
13 page Bank Addendums, how one sided they are.
How much the property was previously purchased for, what it listed for, the price drop etc.
The condition of this already foreclosed home. Several families lived in this one home.
How she negotiated and beat out 3 other offers (after a drastic price drop).
- Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com 703-827-4OO6 Please report all typos, I don't like looking stupid. If you like this post, sign up for new posts, use the form on the right of the page.
Newspapers are filled with talk of the flood of foreclosures, but none that I have seen have taken a step back and defined all the different industry words for my new industry word: "SOL" (S* Out of Luck) Homes (tm), and how to buy them. 2-3% of MLS listed homes are SOL in Northern Virginia. Can your agent find them?
Well SOL homes can get you a 5-15% discount* if you
Know how to search for them, AND
You have patience
You aren't picky!
Fully understand the risks of buying "as is"
* Side shout: BusinessWeek did a great job in their articleThis Old Foreclosure Buying directly from a bank avoids some risks, but don't expect a steal They both dispelled the 30-50% pennies on the dollar mentality people equate with foreclosures and how foreclosures of a year ago are different today, they no longer occur mainly on courthouse steps. They use the MLS)
So, let's go over the SOL terms:
Pre-Foreclosure: term used by agents or sellers that are in the process of being taken to the courthouse steps since they have defaulted on their mortgage (didn't pay it). They want to sell the property before it gets foreclosed on, and oftentimes before it is taken over by the bank. Banks sell them on the MLS through Realtors (learn how to find these later in the article). Here are some examples of Fairfax Pre-foreclosures on the MLS.
Foreclosure: Technically a foreclosure is a house that is being auctioned off at the courthouse steps. Many people use this word incorrectly to represent a house that is in Pre-foreclosure, or has already been foreclosed on and taken over by the bank (see REO). Traditional foreclosures aren't occurring on the courthouse steps as much (see BusinessWeek Art) since the amount owed (the starting price for the auction) is TOO HIGH. So when the minimum price is too high on the courthouse steps, the banks take them over and sell them on the MLS through Realtors. (learn how to find these later in the article) Here are some examples of Arlington Foreclosures on the MLS and don't forget Realtors that can't spell and leave off the E in "forEclosure": Virginia Forclosures
Short-Sale: Usually an MLS listed house that is heading toward foreclosure. The deal requires 3rd Party Approval (the bank) because the seller is trying to sell for BELOW the loan amount and is hoping that the bank will approve the deal, and eat the loss. Only about 5-15% actually get to closing since banks oftentimes say, "no" (blog post coming soon, so sign up). For example, a $500k home was bought with 100% financing. If the market price is now $450k, a seller can a) bring a $50k check b) try a short-sale c) let the bank foreclose. With a short-sale, the bank eats the $50k. Note that the seller still gets a taxable 1099 for the difference (at least for now). This process is seen as being better for the seller's credit vs bankruptcy and foreclosure. The benefit sometimes to the bank is lower foreclosure costs and re-marketing hassles.
REO- Stands for "Real Estate Owned", but it really means Bank Owned. I guess buying a B.O. house wasn't too appealing. These are homes that were already "foreclosed" on. Nobody bought them on the courthouse steps and the bank took it over and is attempting to sell them, usually (but not always) for a discounted price.
Third Party Approval- If you see this in a listing, it is probably a Short-Sale and it is warning the agent that some extra paperwork and time will be required.
Auctions, "Buyer's Premium": Some auctions require a 2-10% "premium" be paid on top of the winning bid. So if you bid $500k, you have to pay $550,000. In my opinion, it is a marketing trick that auction houses use to trick sellers by saying "you pay nothing, the buyer pays our commission." Just make sure you do the math, your NET is what matters.
Auctions, "Reserve price." Sometimes this is also a marketing trick. I have seen $700k listed houses have a $690k reserve. They get people at the auction all excited to get a deal. The auction ends and they say, "sorry you didn't meet the 'reserve price', here, how about a counter?" Sounds like a trick to find out who might be remotely interested in the property.
Auctions, "No Reserve." If you are an Ebayer, you know what this means. The product will be sold, no matter HOW low it goes. If you see "No reserve," it MIGHT be what I call a REAL AUCTION (send it to me, I'd love to see it)
Auction disclaimer: I am not an expert when it comes to Auctions. I still have yet to see ONE "real auction" in Northern Virginia. I think they don't exist, but I can be proved wrong if you'd like (have at me in the comments section).
Dealing with SOL property are a PAIN.Expect counters to sometimes take several days, and sometimes months!
And an SOL home is NOT necessarily a better deal. Somebody might have paid $500k for it with 100% financing and the list price might be $480k as they feel the waters. I saw one short sale in my building that started at $600k (they paid $590k). It was overpriced, so it sat. Then the seller/bank got serious. They did a drastic drop to $530k. It sold for full price (while I had 4 people come to me wanting to offer $480k, and they missed out). This was 1 of 2 best priced units in the building over the last 2 years. Another short-sale came on and was sold in 4 days, so if you want these, be ready to act FAST.
So how many of these are there EXACTLY on the MLS?!
Homes that are SOL can be found by having your agent search the Realtor Remarks for keywords, or try it yourself on the new keyword based FranklyMLS.com:REO, foreclosure, bank, pre-foreclosure, foreclosed, forclosure*, short sale, auction, third party, 3rd party. *9% of the time this word is misspelled!
In Arlington:
Today there are 287 MLS homes $400k-$500k. 10 (3%) are SOL (Arlington SOL Homes)
If you do plan to buy, you need a good agent to know when to spot a "better deal" (remember I don't believe in "good deals" until you sell your place. See "Buyer's Market?" No Such Thing As a "Good Deal")
NEW SYSTEM TO FIND SOLs: MLS EMail alerts.
Have your agent sign you up for alerts based on your price range, area AND these SOL keywords in the Realtor Remarks (different than the Public Remarks). If your agent can't do it, have them email me, I'll show them how. If you don't have an agent... (sorry I tried to hold off as long as possible) welcome to FranklyRealty.com . I'll set it up for you.
Frankly, the #1 questions I get are market timing questions like: "Have we hit bottom?" and "Is NOW the time to buy?" Well, after months of thinking and market analysis I've discovered the EXACT time you should buy, down to the DAY!
So you no longer believe the "Buy Now!" campaign from the National Association of Realtors. Especially since The New York Times quotes the former Chief Economist David Lereah as acknowledging he had gotten it wrong. Also you no longer hear the office water cooler chat: "Historically with a 7% annual appreciation, you can't go wrong" or "stop throwing money out the window" (see my "Don't Buy, Ask Why" video/blog).
The market has been dropping over the last two years. Poorly, I mean "badly" (especially condos). In the newish building where I live (Clarendon 1021, an Arlington Condo in Virginia), one particular unit went from $585,000 starting price, up to $670,000, and then down to $530,000 in a pre-foreclosure last month. A lugubrious $140,000swing! So it would make sense that people would ask me "is this the bottom, should I buy now?" and today's "So there are some real deals out there?"
I can understand the fear that a prospective home buyer has in this marketplace. Nobody wants to be made the fool that bought at the top. Even knowing that they got the place for $50k or $100k better than atopper(a made up word for somebody that bought at the top), isn't good enough. They want the exact inflection point. They want to be the braggart of the officeplace in a year or two when they are "rich."
I call these people Market Timers.
Enough already? When EXACTLY is the right time to buy...?
The day, as in the exact day is...the day you stop caring about the bottom of the market and you decide you are ready to live in a place for 5-10+ years and enjoy life.
I'm serious. It might sound like a convenient way for yet another Realtor to make "now" always the best time to buy, but show me one other blog that will also tell you that the economics of buying are still WAY off, and might be for many years to come. The economics of renting are still far far better than buying, even after the tax advantages.
I've always maintained that your house should be #1 about enjoying life and all the "warm and fuzzies" that come with home ownership, and maybe #4 can be about investment. Those that try to make them both #1 will have an analysis paralysis situation.
My next article will be about Pre-foreclosures, short sales and bank owned properties. If you like what you are hearing, make sure you sign up for this blog via Feedblitz on the right side.
- Written by Frank Borges LL0SA- Broker FranklyRealty.com
p.s. Typos, please report them to me.
p.s.s. For those that really wanted some "timing," all I can say is December is when there are the fewest # of buyers, and you might get another 1-3% off. Come Jan 2nd there is a FLOOD** of new buyers that have put the holiday stresses behind them, and are eager to buy. The problem with waiting until Dec is the inventory and your options are the lowest.
Correction: A commenter called me out on the use of "FLOOD", that was probably too strong of a word. I ran the numbers and actually January had 40% more under contracts than November and only 20% more than December for 22201. So maybe I should have said a "smidgen more." See comments for more details.
Frankly, buyers say they want a good deal, but oftentimes they aren't willing to go through the emotional roller coaster the buying process can put them through. A good Realtor will try to shelter the buyer from stress, but inevitably it is up to the seller and their threshold for being aggressive.
For the most part I don't really believe in the idea of a "Good Deal" (see post Buyer's Market?" No Such Thing As a "Good Deal" ), but you can get a better deal if you are open to being flexible and buying with your mind (and agent) and not with emotions.
Too often I find buyers that want an aggressively low price, but then they fall in love with one place and they fold their cards rather quickly.
I learned from my mother that you never know the situation or needs of the seller. Some might be pressed to sell quickly for they fear the market is getting worse, or are approaching a foreclosure. Meanwhile others might have the mentality of "If I don't get what I want, I'll just rent."
How do you know which is which? Ask them (indirectly), one by one.
Round Robin System
Be flexible. Find two or three homes that you like. Don't think in terms of whether you like them at X price, think in terms of "I'd prefer house #1, but I'd consider ABC if it was $X off"
Put in ONE offer. Let that agent know that you have 2 or 3 properties and you would like to first offer on their property. (Ethically you can only put in one offer at a time. Even if you have "outs," your contract has to expire or be countered (a counter nullifies the initial offer) before you can move on.)
Review counter or accepted contract. The seller can a) accept, b) reject or c) counter. If the counter is something you want to work with, keep it alive. Otherwise
Move one, offer elsewhere. The negotiation isn't over, but you tell the listing agent that you will now offer on another property. And since your client can't make two open offers, the listing agent is still invited to re-submit. I like to end with a "we may or may not come back in a few days if the other houses don't work out."
Sidenote: Why would I reveal my strategies? A listing agent might be reading... GREAT! Then they know I'm serious when I say we are offering elsewhere and may or may not come back.
Repeat as necessary (are you really supposed to "shampoo, rinse and repeat?") with a slightly higher price, until somebody bites.
Again, this technique isn't for everyone. It might sound sexy to be aggressive and all your officemates might talk about "lowballing" and nobody wants to overpay, but if you want that extra $5k- $25k, be prepared to spend $5 on some sleep meds.
Love to get your comments. Do you do this? Do your clients have the stomach for it? Do you consider it unethical?
- Written by Frank Borges LL0SA- Broker/OwnerFranklyRealty.com 703-827-4OO6 Please report all typos, I don't like looking stupid. If you like this post, sign up for new blogs daily, use the form on the right of the page. Keywords: Negotiate, low-ball, purchase agreement, contract, offer, buying strategies
Some Realtors think their job is to make client's feel all warm and fuzzy by making the buyer think that they got a "Good Deal." Kind of like how almost everyone who buys a car walks out thinking that they got a steal of a deal!
I don't believe in this. I am not hired to be a comforter. I'm hired to get the most suitable property at the best price possible, and to do so aggressively, if that is what the client requests.
While the client might have landed a "better deal" than other active or sold listings, it is only a "good deal" years later when they sell it and the cash is in their bank account. Even those appraisals that are done while you are under contract, they can come in $10k or $20k higher, that means nothing to me. Appraisers sometimes like to make their loan officers, who hired them, happy by padding the numbers to make the buying client feel warm and fuzzy.
Good deal vs a better deal. Here is an example, I had a client, a close friend of mine, that desperately wanted to "grow up" (in his words) and get in on the action. This was during the bidding war days. I rarely give my opinion (instead giving data and evaluating it with the client) but I told him he was crazy. Yet, he gave me marching orders to "get that condo at whatever cost." He was scared that if he missed out on this condo, the next condo would be $25,000 higher. We "lost" the bidding war. Thank God. This $350,000 750 sq foot condo received 8 offers and went up to $400,000!! What a fool that "winner" was! Yet, I bet the winning Realtor assured their client that they got a "good deal" as they ran to the bank to spend the commission.
So what next? Well I had information that maybe only 10 people in the bidding process were privy to (the contract price is only published after the close 30 days later). This building was about to reset $50,000 higher so we had to move fast, since he felt he "needed" a place ASAP.
I immediately sent out inquiries to the entire building. I was able to find him a unit that was 1100 sq ft or about 35% larger... that we negotiated for $395,000. The seller thought he got a great deal, but he didn't know that the unit he was using as a comp, was just bid up $50,000, and it surely wasn't my job to tell him that. I work for the buyer, not the seller (in this case).
Side note: I know FSBO's (For Sale By Owners) love "saving" on those damn Realtor commissions, but how much did this guy "save" by selling it for $50,000 under market price?
So while this might sound like a "Good Deal" it was merely a "Better Deal." I DID say it was a BETTER deal than the 750 sqft unit, but again, nothing is a good deal until you cash out. Sure enough, the market immediately took a nose dive. He blames the entire nations price drop on the fact that he made his purchase and that bad things follow him. All I can say to that is thank goodness he didn't buy the other unit that was significantly smaller. Hopefully the market will come back and if he gets into the positive territory again AND he sells it, then and only then will it be a "Good Deal"
More recently I had a client (that found me 100% through this blog) that I helped put a house under contract for a good deal... I mean for $40k under similar recently closed units. We did the home inspection and found $1,500 of items that we hadn't seen during our two visits. (I don't believe in going after imperfect items that we already know about at the time of contract, I'll deal with those on the initial contract such as a broken step or broken window). The listing agent (did a great job fighting for her client) kept saying that her client dropped their price so much to accept our offer and that they felt they were selling at the bottom of the market and my clients got a "GREAT DEAL."
To that, I proposed the follow (my clients loved it): Dear listing agent, If your clients are so certain that this is the bottom of the market, lets forget the $1,500 for now and instead put $3,000 in escrow. If within 12 months, one house sells lower than our purchase price, my clients get the $3,000, if three sell for more, your clients get the $3,000 since that might signal the bottom of the market. Frank
The listing agent hadn't ever heard of such an Indecent Proposal!
They accepted the $1500 adjustment.
So no matter what the market is, at the top, at the bottom, near the middle, it is always important to get the best deal possible at that time, even if you are certain "prices can only go up from here."
And I am NOT talking about % below list either. Oftentimes people get caught up in the "I saved 30% shopping today at Sax Fifth Avenue outlet mall." So don't get caught up with % off list and instead look at the value. Value Value Value will be an upcoming blog.
I'd rather have a client buy a $500,000 place for $510,000 which is "worth" $550,000 (based on comps) than buy a $100,000 overpriced house listed at $650,000 for "$50,000 off" list. Focus on VALUE, not on % off list. Some agents will price things to move (see my CRA system featured in RealtyTimes.com) in a week, while others will overprice to get the listing, knowing that it won't sell but they will get paid sooner or later after price drops (the CRA can tell you this!!).
So even if you buy for 20% off (allow for the slight exaggeration), that only makes it "probably" a good deal. What if another unit next door sells for 40% off? And of course, the longer you hold your house (5-15 years) the better the chance of getting a "Good Deal." But ultimately you never know, and it is only a "Good Deal" if you can you CASH IN!
Please tell me if you see any typos, I don't like looking dumb. Also hit "subscribe" to get future blogs. - Written by Frank Borges LL0SA- Virginia Broker/ Owner FranklyRealty.com 703-827-4OO6 Please report all typos, I don't like looking stupid. If you like this post, sign up for new blogs daily, use the form on the right of the page.
Videos at YouTube.FranklyRealty.com Keywords: Housing bubble? Arlington, Alexandria, mls, homes, Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC Realty, Realtor
Joule condos, formerly owned by Ed Peete (Arlington Virginia) recently announced a transformation from condosownership to apartment rentals. Canceling hundreds of contracts in the process.
Update April 3rd 2007. Email me, I have a nearly official word that Zoso is going rentals!!
A dozen local condo developments have taken this route and I predict that Zoso condos (also from Ed Peete) in Arlington will be next.
How can I make this prediction? Lets look at the obvious facts:
Ed Peete just did it with the Joule condos in Arlington.
Only 60% have been sold at Zoso. That is nothing. The bank will require certain milestones be met and I bet that most of those sales were in the first 6 months, with maybe a sale or two every month since.
Pricing. The units were priced at Clarendon 1021 values (across the street) when flippers were making an $80k profit. Now 1021 sellers are lucky if they break even. (see NY Times Article)
Withdrawn MLS listings. They withdrew their listings on the MLS on Dec 26th 2006. What company trying to feverishly sell their condos would withdraw from the MLS?
Why does this matter to buyers? One savvy business man recently told me "I spoke to the builder... they are claiming to be on target for their delivery dates. They are definitely keeping it as condos." He would rather know the truth so that he can get on with finding his perfect condo. Instead he gets strung along for over a year and then is left with nothing.
How can the contract allow for them to tear it up? Most new constructions contracts have a clause that outlines the penalties for purchasersthat back out of deals. However there is a clause that allows the seller to back out of the deal with no penalty (maybe you will get some interest on your deposit). This lack of mutuality (read court case on Mutuality) is being contested by some lawyers (email me if you need a lawyer), and is being used by buyers to get out of new construction contracts.
How can a buyer get the facts and expose their Achilles heal? First of all if you haven't bought a new condo yet, have your Realtor try to strike the clause that allows the seller to get out with no penalty. Or specify some damages. Whether it be $1,000 or $20,000 or your deposit amount.
If you already bought a place and they tell you they are "definitely keeping it as condos", then they shouldn't have any problem writing up a little bitty addendumy-poo to the contract that calls for damages if they lie to you verbally. Watch them shake in their pants and run for the hills.
Why are developers giving up? A brief history... In the olden days, New Constructions were a great deal. Builders would sell units at 15-25% below market price in order to be able to sell 200-400 units. It is simple supply and demand. If you want to sell 200 of something, you better come in super low to make sure you sell out. But then the market rocketed and flippers were able to pocket the 20% discount AND realize the 20% jump in the market (during the 1-2 yr development). I know a lady, straight out of college that made $80,000 just 2 weeks after closing.
So the developers saw everyone getting rich and they wanted their money back! They also saw buyers line up in the thousands (3,000 for Clarendon 1021) and they started selling units at current market prices (no more discounts). Buyers were buying hoping for the same run up, since it was a "sure thing". (See my blog on a flipper that lost $150k) Sure enough, with Clarendon 1021 the first 10 sellers made a killing, as much as $100k. But then the next 10 made $50k and the next 20 were lucky to break even, with some losing over $30k.
Zoso and Phoenix condos in Clarendon Arlington meanwhile priced their units at the TOP of the market when the flippers made $100k.
You know it is a bubble when you hear about 4 taxi drivers that decided to get rich and pool their money together to buy a new construction. Where are they now, I wonder.
So what happens when you sell "60%" of the building for $100k over the current prices nearby? You have un grande problemo (that means a "big problem" in Spanish). You can't drop prices for the rest of the units, or the current purchasers will want out. But if you don't drop, nothing sells. (Some builders have resorted to illegally fudging the MLS, see blog, which is why you should use a Realtor!)
Why does this matter for the Arlington area? It helps the existing condos. Simple supply and demand. Remove the supply and people buying will look next door at 1021. Now does this inside scoop mean you should run out and buy at 1021? Yes. Absolutely, and from me, so I can get filthy rich! Nah, but each conversion back to apts. definitely can't hurt. And of those 100 buyers, lets say half are investors, maybe half of the rest (25) might look nearby. 25 active buyers? That helps values.
And for those of you that dislike Realtors, you'll love this... When a condo development decides to convert to apartments a week before closing, guess what the Realtor gets? ZILCH!
So did you get anything out of this? If so, return the favor by sending this or another blog of mine to a friend (even if they aren't in this state, since information is power) and sign up for this blog via email (see Feedlitz form on right). Thanks!
- Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com 703-827-4OO6 Please report all typos, I don't like looking stupid.
Videos at YouTube.FranklyRealty.com Keywords: The Prime, Orange line metro, williamsburg condo, courthouse hill, Ballston, rosslyn, Clarendon, Virginia square, condo conversions, Turnberry Tower Virginia, abdo, Carlyle Place, 1800 wilson, Waterview, The Jamieson , Gatehouse condos, prescott, the grove at arlington shirlington village, Io Piazza, The reserve, Byron , East View/West View , Park at Courthouse, Park Crest, Renaissance 2230, The Palatine , Avera Station, The Exchange at Van Dorn , Monroe at Virginia Square Metro, Hawthorn, Ballston 880 Courthouse Heights , Pearson Square , The Odyssey , Residences at Lyon Hill, Ellipse McWilliams-Ballard , Halstead Towers Westlee, Preston at Potomac Yard, Savoy, Spectrum, Garfield, Bromptons at Cherrydale - Condominiums, Housing bubble? Arlington, Alexandria, mls, homes, Real estate, Virginia, 22203, 22201, 22314, Fairfax Va, DC Realty, Realtor
What is an "Exclusive Buyer Agency Agreement"? This is a contract that a buyer is oftentimes asked to sign by a buyer agent Realtor. In part it commits the buyer to use this one agent exclusively for several months.
Why in the world would you sign this?
How could signing all your rights away ever help you, the buyer? Where is the "What's in it for me?" in that proposition?
Don't you still want to be able to:
Use another Realtor if you don't like this one?
Buy a FSBO and have no commission be paid!
Bypass the buyer agent and make the listing agent give me the commission?
Walk into a New Construction and sign papers, who needs a Realtor for that? I got them down $50k!
Have 2 or 3 eager Realtors compete for your business. Each one working their tail off to find you that hidden gem. Doesn't cost you anything, so why not? (just like the Double Agents show, where 2 Realtors compete: see Video)
If you find the home, why should he get paid anything?
Why sign an "exclusive" agreement, when you can sign a "non-exclusive" agreement?
And that sales pitch is so hoaky sometimes:
"My broker requires it before showing you anything."
"This is standard."
"If you don't sign this, then I am legally working for the seller. If you sign this, it acknowledges that I am working for you, the buyer." (my favorite, as the law reads, it is true, but in reality, it is just a pitch)
What a ton of B.S.
So let me know if I missed anything. All of the above is the typical viewpoint of the buyer right? I know it well. I grew up with it. My mother was the most cynical person and would never sign one of these agreements. She didn't see the "how can this help me." In part it is the Realtor's fault for not explaining the process clearly.
But, and here is the big butt, I have seen the other side! It isn't always as shady as it initially appears and it can help the buyer.
As a Realtor, many newbies feel bad getting their clients to sign these contracts. Sometimes they let it slide, until one day they understand why it protects the Realtor. Then I'll go into how it helps the client. What? This exclusive contract can help the buyer? How in the world is this going to come around full circle? Ah, the suspense.
Background story: I was helping some clients buy a home in 2004. Many buyers might think we are paper pushers, but some of us Realtors go above and beyond. Including once driving to Chantilly to take 100+ photos of the interior of one unit. Why? Because of Sucky Listing Agents. The agent only had 1 photo, and the buyer was out of town, so I created a virtual experience for them. (I do this for all of my buyers, I take about 50-100 photos of EACH place we see together and I create on online private album for them to remember everything. Does your B.A. do this?)
Anyhow, we put an offer in on one place. We didn't get it. I'm ok with that. I could have talked them into a higher price, and won, but I didn't do that. I worked for their best interest, not mine. Then they found a For Sale By Owner. It was literally 20% overpriced (as many FSBOs are). They had me run the numbers and do a full analysis on the neighborhood etc. I even helpe
I officially have 100% proof that we have officially hit rock bottom. 
" but now I can show proof that NOW is the time to buy! That market is going UP UP UP!
I am officially launching 
Every buyer agent with an ounce of techie-ness should be taking 
several otherwise competing agents come together to give what the customer wants... MORE INFO and PHOTOS. 
So you've just looked at 10 homes and your brain is fried.
, I guess the client could do it, but they should be absorbing the house on a macro level. Meanwhile the agent snaps 4 or 5 quick shots per room (no time for Ansel Adams). I strongly suggest the 
I was reading The Washington Post on Sat November 24 and 
Punchline: Buy homes with No Additional photos= Save $15,000 on a $400,000 house.
hey have no excuse. 
elisted (see my best of 2006 blog on 
Newspapers are filled with talk of the flood of foreclosures, but none that I have seen have taken a step back and defined all the different industry words for my new industry word: "SOL" 
bankruptcy and foreclosure. The benefit sometimes to the bank is lower foreclosure costs and re-marketing hassles. 
Frankly, the #1 questions I get are market timing questions like: "Have we hit bottom?" and "Is NOW the time to buy?" Well, after months of thinking and market analysis I've discovered the EXACT time you should buy, down to the DAY! 
oday's "So there are some real deals out there?"
ysis paralysis situation. 
come back.
Again, this technique isn't for everyone. It might sound sexy to be aggressive and all your officemates might talk about "lowballing" and nobody wants to overpay, but if you want that extra $5k- $25k, 
Joule condos, formerly owned by Ed Peete (Arlington Virginia) recently announced a 
he contract allow for them to tear it up?
$20,000 or your deposit amount.
What is an 
But, and here is the 
neighborhood etc. I even helpe